Mapping Your Future: Correcting issues with IRS verification flags


Correcting issues with IRS verification flags

By Catherine Mueller

January 18, 2018

There may be some celebrating in financial aid offices – especially among staff handling verification – with the news that the Department of Education (ED) will be correcting two issues related to the Internal Revenue Service (IRS) Data Retrieval Tool (DRT) process.

The Office of Federal Student Aid (FSA) said in a January 16, 2018 Electronic Announcement (EA) that two issues occurring with data flags associated with IRS DRT process in the 2018-19 FAFSA have been identified and corrections have been planned.

The first issue deals with the IRS Request Flag not updating correcting in some circumstances. According to FSA, when a student or parent changes the tax return filing status value after transferring data into the FAFSA form using the IRS DRT. The change should result in an IRS Request Flag of 03. Instead, it is incorrectly displaying an IRS Request Flag of 02. FSA expects to have a correction in place later this month for this issue, but, in the meantime, financial aid administrators may accept an IRS Request Flag of 02 and consider this transaction as verified (if the application was selected for verification and only when the IRS data field flag equal to "2" is in the tax return filing status field). Financial aid administrators should read the EA to make sure their office follows FSA's specific guidelines.

The second issue deals with situations in which 2018-19 transactions include an IRS Data Request Flag of 06, indicating the student or parent is ineligible to use the DRT, even though it appears that they should be able to use the DRT. The problem occurs when the student or parent takes one of several actions (outlined in the EA). FSA expects a correction will be in place in late January but, in the meantime, students or parents should make any corrections to an earlier transaction that doesn't have the IRS Flag of 06.